Businesses Waiting on State Budget Reform

Making Connecticut government work better and more cost-effectively is not just a good idea—it’s vital for jobs, the economy and the state’s long-term survival, say businesses.  

A state budget that’s out of balance by the hundreds of millions this year and probably going to get much worse—ballooning to a multi-billion dollar gap in the next two years—doesn’t bode well for the economy. Connecticut already has lost 94,500 jobs so far in the recession and could lose at least 10,000 more by mid-2010.  

An unstable state budget and uncertain tax climate won’t improve matters either—70% of businesses responding to a CBIA membership survey say the state is moving in the wrong direction, and 68% of executives with businesses in the state say they would not expand here but would do so outside of Connecticut. 

CBIA testified before the Appropriations Committee this week to support Gov. Rell’s budget revisions (HB-5018) and her views that state government that has outgrown the ability of taxpayers to pay for it, government must become smaller and more efficient, and that higher taxes are not the solution.

It’s time, as the Governor recommends, for a top-to-bottom review of state spending and how state government is performing for taxpayers’ dollars. The more effective and efficient that government is, the better our business climate will be and the sooner we will see jobs created.

• CBIA also supports the governor’s recommendations for:
• No tax or fee increases
• Giving the governor enhanced rescission authority
• Implementing bonding reform
• Improving government efficiency and restructuring services
• Expanding the use of cost-sharing to help keep services in place, but at lower cost
• Bringing the budget under spending cap growth levels

CBIA Economist Pete Gioia testified that old habits of raising taxes in a crisis is a bad idea and won’t work, because the current recession is remaking Connecticut’s economy. Last year there was a huge decline in personal incomes along with massive job losses and thousands of business closings in the state.

Now is the time for serious structural budget change. CBIA supports the governor’s idea for a PEFORM commission that will thoroughly review government programs, structure and delivery systems. Many other efforts are underway, too, including the Commission on Enhancing Agency Outcomes and the Appropriations Committee’s results-based accounting efforts, which may provide ideas for reform.  

There are also innovative ways to streamline the budget, especially in areas such as long-term care and incarceration. Nonprofit agencies can be more broadly used to provide state services more cost-effectively with equal quality. State employee and retiree health care and benefits should also be looked at for possible reforms.  

CBIA urges lawmakers to make the necessary difficult decisions that will make the state budget more affordable, state government more efficient, and put our economy on the path to recovery.

For more information, contact CBIA’s Pete Gioia at 860.244.1945 or pete.gioia@cbia.com.